Obligations and Contracts

Created by JOHN PAUL CONSTANTINO

Obligations and Contracts

Obligation

Obligation is juridical necessity to give, to do or not to do

Definition and Elements

PAPJ:

Prestation(Object), Active Subject (Creditor/Obligee), Passive Subject (Debtor/Obligor), Juridical Tie (Vinculum Juris)

Legal Basis

AR 1156, NCC

Ang Yu Asuncion v CA

Law: Imposed by law cannot presumed (AR 1158, NCC)

Contracts: Based on parties stipulation must be in good faith (AR 1159, NCC)

Negotiorum Gestio:

Voluntary taking over the management or business without authority (ART 2144, NCC)

Sources

Quasi-Contracts: Lawful unilateral acts to prevent unjust enrichment (AR 2142, NCC)

Domestic Petroleum v. Manila International Airport

Delicts: Civil liability arising from criminal act (AR 100, RPC)

Solutio Indebiti:

Something is received with no right or delivered by mistake. (AR 2154, NCC)

Quasi-Delicts: Fault or negligence causing damage (AR 2176, NCC)

Obligation to give (Specific, Generic, limited specific thing) with DOAGFOAF Diligence of a good father of a family

Extraordinary diligence for transportation or common carriers

Nature and Effect

Obligation to do or not to do

Rights and duties of creditor and debtor

Transmisibility: Rights can be transfer except personal obligation extinguished by death

Payment means complete or performance

Performance of Obligation

Exceptions: Substantial performance, incomplete/iregular performance, partial prestation (Sripulated)

Causes: invulontary (Fortuitous Event, Force Majeure)

voluntary (mora/delay, dolo/fraud, culpa/negligence, contravention)

Mora/Delay:

solvendi (debtors fault), accipiendi (creditors fault), compensation morae (both fault) (ART 1169, NCC)

Breach of Obligation

Dolo/fraud:

intentional evasion of obligation (AR 1170-1171, NCC)

Culpa/negligence:

Failure to excercise of DOAGFOAF (AR 2176, NCC)

Fortuitous Event:

Unforseeable, inevitable event releasing debtor from liability (AR 1174, NCC)

(AR 1165, NCC)

Specific performance or Rescession

Remedies of Obligation

(AR 1170, NCC)

Damages for fraud, negligence, delay

(AR 1191, NCC)

Rescission extinguish obligation retroactively, mutual restitution is required.

Subsidiary Remedies

Accion Subrogatoria:

creditors excercise rights to collect debtors debt (AR 1177, NCC)

Accion Pauliana:

Debtors right to rescind contracts made in fraud of creditors (1391, NCC)

Pure

ART 1179, NCC

No condition or term, immediately demandable

Conditional (ART 1181, NCC)

Suspensive

obligation arises upon condition fullfillment

Resolutory

obligation extinguished upon condition fullfilment

Kinds of Obligation

Suspensive term

Delays demandability

Term

Resolatory term

ends obligation at fixed date

Alternative and Facultative

Alternative

debtor may perform one of several prestation

Facultative

debtor may substitute prestation unless lost without notice

Join and Solidarity

Joint

debtors liable for proportional parts

Solidarity

each debtors liable for entire obligation (AR 1212-1222, NCC)

Legal Basis

Nunez v. Moises-Palma

Accessory clause increasing liability for breach

Obligation with penal clause

Penalty increasing damages incase of breach

May be reduce in court incase of iniquitous

Legal Bases

PEZA v. Philhino Sales Corp

Principal causes:

Payment, loss of thing, rmission, merger, compensation, novation

Other causes:

Annulment, recission, resolutory condition, prescription

Must be complete and by proper person

Extinguishment of Obligation

Payment and performance (ART 1232-1248, NCC)

Payment to wrong person generally invalid unless exceptions

Currency must be legal tender or stipulated

Tender and consignation valid under specific conditions

Only extinguishes obligation if without debtor fault, prior delay

Lost of the thing

Creditor may have remedies against third parties causing loss

Condonation (remission)

Gratuitous renunciation of claim, must be accepted.

Formality required depending on value and type

Merger (confusion)

Occurs when debtor and creditor become same person, extinguishes obligation.

Compensation

Mutual extinguishment of debts under requisites.

Legal, conventional, judicial kind

Substitution or change of obligation or parties extinguishing old obligation

Novation

Requires consent and valid new contract

Includes substitutions of debtor or subrogation